Money Essentials

Setting your target car price

It's easy to learn what the dealer's cost is on any vehicle. Find out before you start negotiations.


Having more information gives you more power. Not long ago, auto dealers had the upper hand because they had most of the information about price, but knowing where to look online can give you an advantage.

Using websites like Edmunds.com or Kelly Blue Book, you can find out the dealer's cost for any vehicle. You can also find out about customer or dealer rebates, subsidized lease deals, or other special breaks that can cut your cost. Best of all, you can decide exactly what you intend to pay for the car or truck before you ever go near a showroom.

The number most often cited as the dealer's cost is the so-called invoice price -- the wholesale price that the manufacturer bills the dealer on shipment. But that is not the whole story.

The manufacturer may offer so-called "dealer incentives" for slow-moving models -- in effect, rebates paid to the dealer instead of the car buyer. Unlike heavily advertised consumer rebates, these dealer incentives are rarely publicized. If you have done your homework and know such an incentive exists, you often can negotiate half or more of that amount for yourself.

A hot-selling new vehicle may sell for a while at full MSRP with no bargaining possible. But for more ordinary vehicles, a good starting point is to aim for a target price of 2% over the dealer invoice price.

For a slow-selling model, you may be able to go even lower. If you discover that the model you want carries a sizable consumer rebate or dealer incentive of $750 or more, let that alert you to bargain harder, since the dealer and the manufacturer want to move that model.

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Updated 7/25/2012 content - aross

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